Exhibit 10.1


 


STOCK PURCHASE
AGREEMENT


 


THIS STOCK
PURCHASE AGREEMENT (this “Agreement”)
is made and entered into this 21st day of August, 2008, by and between Billie J. Eustice and the Gary L.
Little Trust  (each a “Seller” and collectively “Sellers”),
and Arkanova Acquisition Corporation (“Buyer”).


 


Background


 


A.                                   Sellers
together, in equal proportions, are the sole record and beneficial owners of
100% of the issued and outstanding shares of the common stock (the “Stock”) of Prism Corporation,
an Oklahoma corporation  (“Prism”);


 


B.                                     Prism
is the sole record and beneficial owner of 100% of the membership interests of Provident Energy Associates of Montana, LLC, a Montana
limited liability company (“Provident”);


 


C.                                     Sellers
desire to sell to Buyer, and Buyer desires to purchase from Sellers, all of the
Stock, upon the terms and subject to the conditions set forth herein.


 


Terms
and Conditions


 


In
consideration of the mutual benefits to be derived from this Agreement, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:


 


1.                                       Sale
and Purchase of the Stock.  Upon the
terms and subject to the conditions stated in this Agreement, at the Closing
(as defined in Section 3(a) hereof), Sellers will sell, transfer,
convey, assign, and deliver to Buyer, free and clear of all liens, claims,
mortgages, charges, security interests, pledges or other encumbrances or
adverse claims or interests of any nature (collectively, “Liens”),
and Buyer thereupon will purchase and acquire from Sellers, all of the right,
title, and interest of Sellers in and to the Stock (the “Transaction”).


 


2.                                       Purchase
Price and Payment.


 


(a)                                  Purchase
Price.  The total purchase price (“Purchase Price”) for the Stock will be an
amount equal to the sum of:


 


(i)                                     Six
Million and No/100 Dollars ($6,000,000.00) plus the amount of the expenditures
by Provident to be paid as provided in Section 2(c) of this Agreement
(including the Earnest Money Deposit, as such term is described in Section 2(b) hereof),
payable by Buyer to Sellers at the Closing by certified check or by wire
transfer of immediately available funds pursuant to wire transfer instructions
which will be provided by Sellers to Buyer (the “Cash Payment”),
and


 


(ii)                                  A
deferred payment payable pursuant to Section 2(d) of this Agreement
(the “Deferred Payment”).


 


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Each Seller
will receive one-half of the Cash Payment (the entire purchase price in the
aggregate) at Closing, and the Deferred Payment, when paid.


 


(b)                                 Earnest
Money Deposit.  Upon execution of
this Agreement by Sellers, Buyer shall pay to Sellers in equal portions, the
amount of One Hundred Thousand and No/100 Dollars ($100,000.00) as a
non-refundable deposit towards the Cash Payment (the “Earnest Money Deposit”).   In the event that the Sellers have satisfied
the conditions to consummate the Transaction set forth in Sections 3(c)(i) and
3(c)(ii), as of the Closing Date (as such term is defined in Section 3(a) hereof),
and the Closing does not occur, through no fault of the Sellers,  then the Earnest Money Deposit will be
forfeited and, without further action, consent or notice, fully released to the
Sellers (in equal proportions).   The
Earnest Money Deposit will be returned to Buyer by Sellers in the event that
the Sellers fail or refuse to consummate the Transaction on the Closing Date
for any reason other than actions or any failure of Buyer to be ready, willing
and able to consummate the Transaction on the Closing Date, including but not
limited to Buyer’s having satisfied the conditions to consummate the
Transaction set forth in Section 3(b)(i) and 3(b)(ii).


 


(c)                                  Well
Expenditure Payment.  As part of the
Purchase Price, Buyer shall pay Sellers, at the Closing as provided in Section 2(a) of
this Agreement, the amount of the expenditures that Provident has made pursuant
to its agreement with the Blackfoot Tribal Council with respect to the wells in
the Two Medicine Cut Bank Sand Unit in Pondera and Glacier Counties, Montana
(the “Unit”), from August 1,
2008, to the Closing Date (the “Well
Expenditure Payment”).


 


(d)                                 Deferred
Inventory Payment


 


(i)                                     At
the Closing, Sellers will provide a written report to Buyer of all gas, oil and
other mineral inventory of Provident or Prism, produced by the Unit and held in
storage tanks or in transit, as of the Closing Date (collectively the “Inventory”).


 


(ii)                                  (ii) 
Buyer will use its best efforts to sell the Inventory at the then current fair
market value, and within a reasonable time not to exceed thirty (30) days
following the Closing.   The Inventory
will be sold on a first-in-first-out basis.  
Within forty-five (45) days following the date Buyer sells the
Inventory, Buyer will deliver to Sellers, in equal portions, the gross proceeds
received from such sale (the “Deferred Payment”),
along with written evidence of the sales price for the Inventory.


 


3.                                       Closing
Matters.


 


(a)                                  The
Closing.   The consummation of the
Transaction (the “Closing”) will
take place at the offices of Munsch, Hardt, Kopf & Harr, P.C., 3800
Lincoln Plaza, 500 N. Akard, Dallas, TX 75201, at 11:00 a.m. CST, on September 4,
2008 (the date of the Closing being herein referred to as the “Closing Date”).   The Closing shall be deemed to be effective
at 12:01 a.m. on the Closing Date.


 


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(b)                                 Conditions
to Sellers’ Obligation to Close.   The obligations of the Sellers to consummate
the Transaction are subject to the satisfaction or waiver by the Sellers (any
such waiver to be evidenced in writing), at or prior to the Closing, of the
following conditions:


 


(i)                                     the
representations and warranties of the Buyer contained in Section 6 of this
Agreement being true and correct in all material respects as of the Closing
Date;


 


(ii)                                  Buyer
having performed the obligations under this Agreement required to be performed
by it at or prior to the Closing pursuant to the terms hereof, including but
not limited to delivery of each document and item, and taking of such actions,
listed in Section 3(d)(ii) of this Agreement; and


 


(iii)                               all
actions to be taken by the Buyer in connection with consummation of the
Transaction and all certificates, opinions, instruments, and other documents
required to effect the Transaction being reasonably satisfactory in form and
substance to the Sellers.


 


(c)                                  Conditions
to the Buyer’s Obligation to Close. 
The obligation of the Buyer to consummate the Transaction is subject to
the satisfaction or waiver by the Buyer (any such waiver to be evidenced in
writing), at or prior to the Closing, of the following conditions:


 


(i)                               the
representations and warranties of the Sellers contained in Section 5 of
this Agreement (subject to any qualifications stated therein), will be true and
correct in all material respects as of the Closing Date;


 


(ii)                            Sellers
shall have performed in all material respects each of Sellers’ obligations
under this Agreement required to be performed by them at or prior to the
Closing pursuant to the terms hereof, including but not limited to delivery of
each document and item, and taking of such actions, listed in Section 3(d)(i) of
this Agreement;


 


(iii)                               there
having been no event or circumstance, which has or will likely have, a material
adverse effect on Prism, Provident or the Transaction;


 


(iv)                              the
results of Buyer’s due diligence review of the assets and liabilities of Prism
and Provident being to its reasonable satisfaction, and


 


(v)                                 all
actions to be taken by the Sellers in connection with consummation of the
transactions contemplated hereby and all certificates, opinions, instruments,
and other documents required to effect the transactions contemplated hereby
will be reasonably satisfactory in form and substance to the Buyer.


 


(d)                                 Deliveries
at the Closing.


 


(i)                                     Deliveries
by Sellers.  Sellers shall deliver,
or cause to be delivered, to Buyer at Closing (a) the original stock
certificates of Prism representing the Stock, together with a stock power or
endorsement duly executed by Sellers for transfer to Buyer on the records of
Prism, (b) a certificate executed by each of Sellers and dated the Closing
Date certifying that the 


 


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conditions set forth in Sections 3(c)(i),
3(c)(ii) and 3(c)(iii) have been fulfilled and, (b) such other
documents as Buyer may reasonably request to consummate the Transaction.


 


(ii)                                  Deliveries
by Buyer.  Buyer shall deliver, or
cause to be delivered, to Sellers at Closing (a) the Cash Payment (less
the Earnest Money Deposit) in accordance with Section 2 hereof, (b) the
Well Expenditure Payment, (c) a certificate executed by an officer of the
Buyer and dated the Closing Date certifying, with respect to the Buyer, as to
its Articles of Organization (or equivalent charter document), the incumbency
and the resolutions adopted by the board of directors of Buyer with respect to
this Agreement and the Transaction, and that the conditions set forth in
Sections 3(b)(i) and 3(b)(ii) have been fulfilled; (d) the
Releases (as such term is defined  in Section 4
of this Agreement), (e) full and complete releases of Sellers and their
respective affiliates and representatives of all liabilities executed by Great
Bear Consulting and Joe Loftis, and (f) such other documents as Sellers
may reasonably request to consummate the Transaction


 


4.                                       Release.   In consideration of the sale of the Stock by
each Seller, and other good and valuable consideration, the sufficiency of
which is hereby acknowledged, effective on the Closing,  Buyer 
shall cause each of Prism and Provident 
to fully and unconditionally release and forever discharge and holds
harmless each Seller and each Seller’s respective heirs, assigns and estates,
from any and all claims, demands, losses, costs, expenses (including reasonable
attorneys’ fees and expenses), obligations, liabilities and or damages of every
kind and nature whatsoever, whether now existing or known, arising out of the
management or operation of the respective businesses and any transaction or
circumstance occurring or existing or related to the period of time prior to
the Closing, relating in any way, directly or indirectly, to the respective
businesses, that Prism or Provident may now have or may hereafter claim to have
against any Seller; provided, however, that, the foregoing release will not
affect any obligations of any Seller to Buyer under this Agreement
(collectively the “Releases”).


 


5.                                       Representations
and Warranties of Sellers.  Except as
disclosed on the Schedules to this Agreement (each of which corresponds to the
appropriate numbered section of this Agreement to which each such disclosure
relates), Sellers individually and separately (not jointly and severally)
represent and warrant to Buyer as of the date of this Agreement and the Closing
Date the matters set forth below.


 


(a)                                  Authorization
of the Transaction.


 


(i)                                     Each
Seller has the necessary legal capacity (in the case of an individual person),
or has the power and authority (if other than an individual person) to execute
and deliver this Agreement and to perform that Seller’s obligations hereunder
and to consummate all of the transactions contemplated hereby, including but
not limited to the transfer, assignment and sale of the Stock.


 


(ii)                                  This
Agreement has been duly executed and delivered by each Seller and constitutes
the legal, valid and binding obligation of each Seller, enforceable against
each Seller in accordance with its terms, except as such enforceability may be
limited by the effect of applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors’ rights generally.


 


(iii)                               The
execution, delivery and performance by the Sellers of this Agreement and the
consummation of the transactions contemplated hereby do not breach 


 


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or constitute
a default under any loan or purchase agreement, indenture, mortgage, deed of
trust, lease, instrument, contract or other agreement binding on or affecting
either Seller or any of his property or assets, the breach of which, either
individually or in the aggregate, could reasonably be expected to have a
material adverse effect on a Seller.


 


(iv)                              No
governmental authorization, and no consent, approval or authorization of, or
notice to, or other action by, any other person, is required for the due
execution, delivery, recordation, filing or performance by either Seller of
this Agreement, or for the Transaction, except for any such authorization or
consent which has been or will be obtained prior to the time at which it is
required to be obtained.


 


(b)                                 Capitalization.   There are 15,000 shares of authorized stock
of Prism, of which 1,000 is issued and outstanding.  500 shares of the Stock are held legally and
beneficially by Billie J. Eustice and 500 shares of the Stock are held legally
and beneficially by the Gary L. Little Trust.  
There are no outstanding rights, options, warrants, conversion rights or
agreements for the purchase, issuance, grant, sale, redemption, assignment,
transfer or acquisition of any shares of Prism’s capital stock, or any profits
interests granted or outstanding.  The
Stock represents all of the issued and outstanding shares of capital stock of
Prism.  All of the shares of Stock are
duly authorized, validly issued, fully paid and nonassessable.  Prism is the sole owner of 100% of the
membership interests of Provident.


 


(c)                                  Title
to the Stock.  Sellers have good and
marketable title to the Stock, free and clear of all Liens.  At the Closing and subject to delivery by
Buyer of those items set forth in Section 3(d)(ii) of this Agreement,
Buyer will receive good and marketable title to the Stock, free and clear of
all Liens.


 


(d)                                 Financial
Statements.  Sellers will deliver to
Buyer as soon as reasonably practical following the execution of this
Agreement, Prism’s unaudited financial statements (including balance sheets,
statements of operations and statements of cash flows) for the one year period
ended June 30, 2008 (the “Financial
Statements”).    The Financial
Statements (a) fairly present the assets, liabilities and financial
condition and results of operations indicated thereby for the period indicated
thereon, and (b) contain and reflect all necessary adjustments for a fair
representation of the Financial Statements as of the date and for the periods
covered thereby.


 


(e)                                  Ownership
of Assets.    The principal asset of
Prism is its ownership of 100% of the membership interests of Provident, and
the sole assets of Provident are (i) all of the leasehold interests
comprising the Two Medicine Cut Bank Sand Unit in Pondera and Glacier Counties,
Montana (the “Leasehold Interests”),
and (ii) all of Provident’s equipment, parts, machinery, fixtures and
improvements located on the Leasehold (collectively the “Unit”).    All furniture fixture and equipment of
Prism will be delivered to or made accessible to Buyer at Closing.


 


(f)                                    Title to Leasehold Interests.  
Provident has good and marketable title to the Leasehold Interests, free
of all Liens, except (i) inchoate operators’ liens attributable to
unbilled joint account expenditures, and (ii) imperfections of title which
do not materially interfere with the use, operation and possession or
materially reduce the value of any particular Leasehold Interests or the
production and sale of hydrocarbons for the account of Provident therefrom.


 


(g)                                 Environmental
and Safety Requirements.   To Sellers’
knowledge, Provident is in material compliance with all applicable
Environmental and Safety Requirements (as defined below) relating to the
Unit.   To Sellers’ knowledge, there are
no outstanding or unaddressed and resolved written communications from any
party with respect to Provident’s failure to comply 


 


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with
Environmental and Safety Requirements relating to any of the Provident’s owned
or leased facilities used in the conduct of its business in connection with the
Unit.  For purposes of this Agreement, “Environmental and Safety Requirements”
means all federal, state, foreign and local laws, rules, regulations,
ordinances, orders, statutes, and requirements relating to public health and
safety, worker health and safety, pollution and protection of the environment
(including without limitation the handling of any polluted, toxic or hazardous
materials), all as amended through the date of this Agreement.    For purposes of this Agreement, “Knowledge” whether capitalized or not,
means the actual awareness of such fact or matter of a Seller.    On or before Closing, Sellers will cause to
be delivered to Buyer any and all written correspondence received by Prism from
BLM / BIA, for Buyer’s review.


 


(h)                                 No
Broker’s Fee.   Buyer will not incur
any liability for any financial advisory fees, brokerage fees, commissions or
finders’ fees due or claimed to be due to any broker, finder, agent,
representative, consultant, or similar person retained by or whose claims arise
from contact with any Seller, Prism or Provident, or any affiliates of a
Seller, as a result of the Closing of the Transaction.


 


(i)                                     Litigation.  Except as listed in Schedule 5(h), there is
no suit, action, claim, investigation, litigation or proceeding pending, or to
any Seller’s knowledge threatened, against or with respect to Prism or
Provident (separately, a “Company”
and collectively, the “Companies’)
or any of their respective businesses or assets.   Neither Company is operating under, subject
to or bound by, and none of their respective assets is subject to or bound by,
any judgment, decree, injunction, writ, prohibition or order of any court or
federal, state, municipal or other governmental body or agency or arbitrator.


 


(j)                                           Disclaimers.  THE EXPRESS REPRESENTATIONS AND WARRANTIES OF
SELLERS CONTAINED HEREIN ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER
REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AND
SELLERS EXPRESSLY DISCLAIM ANY AND ALL SUCH OTHER REPRESENTATIONS AND
WARRANTIES.  WITHOUT LIMITATION OF THE
FOREGOING, THE STOCK AND CONSEQUENTLY THE UNIT SHALL BE CONVEYED PURSUANT
HERETO WITHOUT ANY OTHER WARRANTY OR REPRESENTATION WHETHER EXPRESS, IMPLIED,
STATUTORY OR OTHERWISE RELATING TO THE CONDITION, QUANTITY, QUALITY, FITNESS
FOR A PARTICULAR PURPOSE, OR MERCHANTABILITY OF ANY EQUIPMENT OR ITS FITNESS
FOR ANY PURPOSE, AND, EXCEPT AS PROVIDED OTHERWISE HEREIN, WITHOUT ANY OTHER
EXPRESS, IMPLIED, STATUTORY OR OTHER WARRANTY OR REPRESENTATION
WHATSOEVER.  BUYER SHALL HAVE INSPECTED,
OR WAIVED (AND UPON CLOSING SHALL BE DEEMED TO HAVE WAIVED) ITS RIGHT TO
INSPECT, THE UNIT FOR ALL PURPOSES AND SATISFIED ITSELF AS TO ITS PHYSICAL
CONDITION, BOTH SURFACE AND SUBSURFACE. 
BUYER IS RELYING SOLELY UPON ITS OWN INSPECTION OF THE UNIT, AND BUYER
SHALL ACCEPT ALL OF THE SAME IN ITS “AS IS”, “WHERE IS” CONDITION.  ALSO WITHOUT LIMITATION OF THE FOREGOING, BUT
SUBJECT TO THE EXPRESS REPRESENTATIONS MADE IN THIS AGREEMENT ONLY, SELLERS
MAKE NO ADDITIONAL WARRANTY OR REPRESENTATION, EXPRESS, IMPLIED, STATUTORY OR
OTHERWISE, AS TO THE ACCURACY OR COMPLETENESS OF ANY DATA, REPORTS, RECORDS,
PROJECTIONS, INFORMATION OR MATERIALS NOW, HERETOFORE OR HEREAFTER FURNISHED OR
MADE AVAILABLE TO BUYER IN CONNECTION WITH THIS AGREEMENT INCLUDING, WITHOUT
LIMITATION, RELATIVE TO PRICING ASSUMPTIONS, OR QUALITY OR QUANTITY OF 


 


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HYDROCARBON
RESERVES (IF ANY) ATTRIBUTABLE TO THE UNIT OR THE ABILITY OR POTENTIAL OF THE
UNIT TO PRODUCE HYDROCARBONS OR ANY OTHER MATTERS CONTAINED IN ANY MATERIALS
FURNISHED OR MADE AVAILABLE TO BUYER BY SELLERS OR BY SELLERS’ AGENTS OR
REPRESENTATIVES. ANY AND ALL SUCH DATA, RECORDS, REPORTS, PROJECTIONS,
INFORMATION AND OTHER MATERIALS (WRITTEN OR ORAL) FURNISHED BY SELLERS OR
OTHERWISE MADE AVAILABLE OR DISCLOSED TO BUYER ARE PROVIDED BUYER AS A
CONVENIENCE AND SHALL NOT CREATE OR GIVE RISE TO ANY LIABILITY OF OR AGAINST
SELLERS AND ANY RELIANCE ON OR USE OF THE SAME SHALL BE AT BUYER’S SOLE RISK TO
THE MAXIMUM EXTENT PERMITTED BY LAW.


 


6.                                       Representations
and Warranties of Buyer.  Buyer
hereby represents and warrants to Sellers that each of the following statements
is true and correct as of the date of this Agreement and the Closing Date,
unless as otherwise expressly stated herein:


 


(a)                                  Organization
and Good Standing.  Buyer is a
corporation duly formed, validly existing and in good standing under the laws
of the state of Delaware with the corporate power and authority to own its
properties and assets and to carry on its business as it is now being
conducted, and is duly qualified to do business and is in good standing in each
jurisdiction in which its ownership of property or the conduct of its business
requires such qualification.


 


(b)                                 Power.  The Buyer has the requisite corporate power
and authority to execute, deliver and perform this Agreement and to consummate
the transactions contemplated hereby. 
The execution, delivery and performance by the Buyer of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the manager of Buyer, and no other proceedings, consent
or actions on the part of the Buyer are necessary to authorize the execution,
delivery and performance of this Agreement by the Buyer and the consummation of
the transactions contemplated hereby.


 


(c)                                  Enforcement.  This Agreement has been duly executed and
delivered by Buyer and constitutes the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms, except as such
enforceability may be limited by the effect of applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the enforcement
of creditors’ rights generally.


 


(d)                                 Authorization.  The execution, delivery and performance by
Buyer of this Agreement and the consummation of the transactions contemplated
hereby do not breach or constitute a default under any loan or purchase agreement,
indenture, mortgage, deed of trust, lease, instrument, contract or other
agreement binding on or affecting Buyer or any of his property or assets, the
breach of which, either individually or in the aggregate, could reasonably be
expected to have a material adverse effect on Buyer.


 


(e)                                  Consents
and Approvals.  No governmental
authorization, and no consent, approval or authorization of, or notice to, or
other action by, any other person, is required for the due execution, delivery,
recordation, filing or performance by Buyer of this Agreement, or for any of
the other transactions contemplated hereby, except for any such authorization
or consent which has been or will be obtained prior to the time at which it is
required to be obtained


 


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(f)                                    Litigation.  There is no action, suit, or proceeding
pending or, to the knowledge of Buyer, threatened, which in any way involves or
affects the Buyer, by or before any court, governmental entity or arbitration
panel or any other Person.


 


(g)                                 Available
Financing.  Buyer has readily
available to it adequate financing necessary to consummate the Transaction.


 


(h)                                 Investment
Representations.  Buyer understands
and acknowledges that:


 


(i)                                     Buyer
is acquiring the Stock for its own account for the purpose of investment and
not with a view to the resale or other distribution thereof.  By taking the Stock, it is prepared to
continue to bear the economic risk of such investment for an indefinite period
of time because the Stock has not been registered under the Securities Act of
1933, as amended (the “Act”) or
applicable state securities laws.   As a
result, the Stock must be held until they are registered under the Act and
applicable state securities laws or an exemption from such registration is
available.


 


(ii)                                  Sellers
intend to, and Buyer agrees that Sellers may, place or cause to be placed a
legend on the Stock, stating that they have not been registered under the Act
or any applicable state securities laws and setting forth or referring to the
restrictions on transferability and sale thereof.


 


(iii)                               As
of the Closing Date, Buyer has had an opportunity to discuss Prism’s and
Provident’s business, management and financial affairs with Sellers, has
received all information he has requested from Prism or Provident, as
applicable, and Sellers and believes such information is sufficient to make an
informed decision with respect to his purchase of the Stock.


 


(iv)                              Buyer
possesses the financial resources to bear the risk of economic loss with
respect to his purchase of the Stock. 
Buyer is aware that no guarantees have been or can be made by Sellers or
any of their representatives respecting the future value, if any, of the Stock
or the profitability or success of the business of Prism.


 


(v)                                 Buyer
has such knowledge and experience in financial and business matters that it is
able to evaluate the merits and make an informed investment decision with
respect to his purchase of the Stock.


 


(vi)                              The
offering of the Stock to Buyer was made only through direct, personal
communication between Buyer and Sellers and not through public solicitation or
advertising.


 


(vii)                           At the
time Buyer was offered the Stock to be acquired hereunder, Buyer was and, at
the Closing Date, Buyer is an “accredited investor” as defined in Rule 501(a) under
the Act.


 


(i)                                     Existing
Lawsuit.   Buyer has been informed of
the material facts in connection with the lawsuit referenced as item 2 on
Schedule 5(h) and has had the opportunity to ask to questions and obtain
responses from the management of the Companies regarding such lawsuit.


 


(j)                                     No
Broker’s Fee.   No Seller will not
incur any liability for any financial advisory fees, brokerage fees,
commissions or finders’ fees due or claimed to be due to any broker, finder, 


 


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agent, representative,
consultant, or similar person retained by or whose claims arise from contact
with Buyer, or any affiliates of Buyer, as a result of the Closing of the
Transaction.


 


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7.                                       Other
Covenants and Agreements.


 


(a)                                  Access
to Information.   Immediately
following the execution  and deliver of
this Agreement by the parties, Sellers will cause each Company to provide to
the Buyer and its representatives reasonable access, upon notice and request,
to all offices and other facilities of the applicable Company, and to all books
and records of each Company, and to cause each Company to permit the Buyer to
make such inspections and to make copies of such books and records as it may
reasonably require and shall cause the officers of each Company to furnish the
Buyer with such financial and operating data and other information as the Buyer
may from time to time reasonably request.  
Buyer and Sellers agree and acknowledge that the conditions of closing,
set forth in Sections 3(b) and 3(c) are the sole and exclusive
closing conditions.


 


(b)                                 Conduct of the Business of the Companies
prior to the Closing Date. 
Except as contemplated by this Agreement or as expressly agreed to in writing
by Buyer during the period following the date of this Agreement and until the
earlier of the Closing Date or termination of this Agreement (the “Pre-Closing Period”), Sellers shall
cause the Companies to conduct their respective operations in the ordinary and
usual course of business consistent with past practice, subject to the
following conditions:


 


(i)                                     Ordinary
Course of Business.  The business of the Companies shall be conducted
diligently and only in the ordinary course of business in substantially the
same manner as the Companies have heretofore conducted their businesses and the
Companies shall not make any material change in personnel, operations, finance,
accounting policies, or real or personal property.  Neither Sellers nor the
Companies shall adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization.  The Companies
shall not acquire, or enter into any agreement or commitment to acquire (by
merger, consolidation or acquisition of stock or assets or otherwise) any
corporation, partnership or other business organization, or any interest
therein or division thereof.


 


(ii)                                  Maintenance of Assets.  The Companies shall maintain the
Leasehold Interests in effect and keep their equipment in as good working order
and condition as at present, ordinary wear and tear excepted, consistent with
past practices and shall not sell, lease or otherwise dispose of any of the
Leasehold Interests or their equipment other than in the ordinary course of
business for full value consistent with past practice or as permitted by this
Agreement.  The Companies shall not make any capital expenditures or
capital additions or betterments except pursuant to the agreement
between Provident and  the Blackfoot
Tribal Council with respect to the wells in Unit and except as may be involved in ordinary repairs,
maintenance and replacement of equipment.


 


(iii)                               Insurance of Assets.  The Companies shall keep in full
force and effect present insurance policies or other comparable insurance
coverage with respect to the Leasehold Interests, their equipment and potential
liabilities.


 


(iv)                              Contracts and Commitments.  The Companies shall not make or
renew, extend, amend, modify, or waive any material provisions of any lease,
contract or commitment or relinquish or waive any material contract rights or
agree to the termination of any lease or material contract except in the
ordinary course of business.  The Companies shall use their commercially
reasonable efforts to perform all obligations under agreements relating to or
affecting their assets or their respective businesses.  The 


 


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Companies shall not sell,
transfer, or otherwise dispose of any material part of their assets.


 


(v)                                 Debts and Liabilities.  The Companies shall not (i) create
or incur any liabilities other than current liabilities incurred in the
ordinary course of business; (ii) discharge or satisfy any lien, charge,
encumbrance, nor pay any obligation or liability, absolute or contingent,
except liabilities incurred in the ordinary course of business; (iii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person; (iv) make
any loans, advances or capital contributions to, or investments in, any other
person; (v) enter into or modify any contract to do any of the foregoing; (vi) pledge
or otherwise encumber the Stock; or (vii) mortgage or pledge any of their
assets, tangible or intangible.


 


(vi)                              Corporate Documents.  The Companies shall not amend their
respective Certificates of Organization or other governing documents.


 


(vii)                           Maintenance of Business Organization.  The Companies shall use their
respective commercially reasonable efforts to maintain and preserve their
respective business organizations intact and retain in their employ their
current employees.


 


(viii)                        Goodwill.  The Companies shall use their respective commercially
reasonable efforts to preserve the goodwill of their respective surface owners,
suppliers, customers, and those having business relations with the Companies
and shall use their respective best efforts to retain their relationship with
all of such persons or entities.


 


(ix)                                Litigation.  The Companies shall not institute, settle, or agree to settle
any action or proceeding pending before any court or governmental body or take
any other action with respect to existing litigation without prior consultation
with Buyer and its legal counsel.


 


(x)                                   Conflicts.  The Companies shall not enter into any transactions or take any
acts that if perfected or performed prior to the Closing Date, would constitute
a breach of the representations, warranties and agreements of Sellers contained
herein.


 


(xi)                                Capital Stock.  Except as consistent with this
Agreement, the Companies shall not: (i) declare or pay any dividend
(whether in cash, stock or property or any combination thereof) on or make any
other distribution upon, or purchase, retire, or redeem any shares of their
common stock, or set aside any funds for any such purpose; (ii) split,
combine or reclassify any shares of their capital stock, or (iii) purchase
or redeem or otherwise acquire any outstanding shares of capital stock or
securities convertible into any such shares, or any rights, warrants or options
to acquire any such shares or convertible securities.  In addition, the
Companies shall not issue or sell or obligate themselves to issue or sell any
additional shares of their capital stock, whether or not such shares have been
previously authorized or issued, or issue or sell any warrants, rights, or
options to acquire any such shares, or to acquire any stock of any corporation
or any interest in any business enterprise.


 


(xii)                             Tax Returns.  The Companies shall not amend any Tax Return or make any Tax
election or settle or compromise any federal, state, local or foreign Tax
liability material to the Companies.


 


11
















 


(xiii)         Acquisition Proposals.  From and after the date of this
Agreement until the earlier of the Closing or the termination of this
Agreement, none of the Companies, Sellers or any affiliate, director, officer,
manager, employee, or representative of either of them shall, directly or
indirectly, (i) solicit, initiate, or knowingly encourage any Acquisition
Proposal (as hereinafter defined) or (ii) engage in discussions or
negotiations with, or disclose any nonpublic information relating to the
Companies or the their businesses to, any person that is considering making or
has made an Acquisition Proposal.  Sellers and the Companies shall
immediately cease and cause to be terminated any existing activities,
discussions, or negotiations with any persons conducted heretofore with respect
to any Acquisition Proposal and shall promptly request each such person who has
heretofore entered into a confidentiality agreement in connection with an
Acquisition Proposal to return to Sellers and the Companies all confidential
information heretofore furnished to such person by or on behalf of Sellers or
the Companies.  If Sellers shall hereafter receive any Acquisition
Proposal, Sellers shall immediately communicate the terms of such proposal to
Buyer.  The term “Acquisition Proposal,”
as used in this Paragraph 7(b)(xiii), means any offer or proposal for, or any
indication of interest in, a merger or other business combination involving the
Companies or the acquisition of any equity interest in the Companies, or any of
their assets other than the Transaction.


 


(c)           Confidentiality.  Prior to the Closing and after any
termination of this Agreement, Buyer will hold, and will cause its officers,
directors, employees, accountants, counsel, consultants, advisors and agents to
hold, in confidence, unless compelled to disclose by judicial or administrative
process or by other laws, all confidential documents and information concerning
the Companies and the Sellers furnished to the Buyer in connection with the
Transaction, except to the extent that the information can be shown to have
been (a) previously known on a nonconfidential basis by the party, (b) in
the public domain through no fault of the party or (c) later lawfully
acquired by such party from sources other than the Companies or the Sellers;
provided, however, that the Buyer may disclose information (i) to its
officers, directors, employees, accountants, counsel, consultants, advisors and
agents with a need to know such information in connection with the transactions
contemplated by this Agreement, so long as those persons are informed by the
Buyer of the confidential nature of the information and are directed by the
Buyer to treat such information confidentially, and (ii)  Buyer and its
parent may disclose certain matters and information regarding the Transaction
to the U.S. Securities and Exchange Commission (the “SEC”), as is necessary to comply with the reporting
requirements of the U.S. Securities and Exchange Act of 1934, as amended (the “34 Act”), or the rules and regulations
promulgated thereunder by the SEC; provided, however that Buyer first provide
written notice to Seller of the information to be disclosed.   If this Agreement is terminated, the Buyer
will, and will cause its officers, directors, employees, accountants, counsel,
consultants, advisors and agents to, destroy or deliver to the Sellers, upon
request, all documents and other materials, and all copies thereof, obtained
from the Companies and the Sellers in connection with this Agreement that are
subject to this confidentiality requirement.  
The terms of this Section 7(c) will survive termination of the
Agreement.


 


(d)           Public Announcements.  No party hereto shall issue, make or cause
the publication of any press release or other announcement with respect to this
Agreement or the transactions contemplated hereby, or otherwise make and
disclosures relating thereto, without the prior written consent of the other
party, such consent not to be unreasonably withheld or delayed; provided,
however, that such consent shall not be required where such release or
announcement is required by applicable law or the rules and regulations
promulgated by the SEC, in which event 


 


12

















 


the party so
required to issue such release or announcement shall endeavor, wherever
possible, to furnish an advance copy of the proposed release to the other
party.


 


(e)           Other Actions.  Each of the parties hereto will use their
respective collective reasonable efforts to (i) take, or cause to be taken,
all actions, (ii) do, or cause to be done, all things, and (iii) execute
and deliver all such documents; instruments and other papers, as in each case
may be necessary, proper or advisable under applicable laws, or reasonably
required to in order to carry out the terms and provisions of this Agreement,
to satisfy each of the conditions to the parties obligations under Section 3
of this Agreement and to consummate and make effective the Transaction.


 


(f)            Dividends.  Sellers agree to waive any right to receive
any accrued but unpaid dividends on the Stock as of the Closing Date.


 


(g)           Pre-Closing
Distributions.  Buyer acknowledges
and agrees that Sellers may cause each Company to distribute substantially all
of their cash and accounts receivable to Sellers and that such distribution has
been contemplated by Buyer in connection with its determination of the Purchase
Price; provided, however, that at Closing, the Companies will retain an amount
of current accounts receivable equal to, at minimum, the amount of accounts
payable of the Companies as of the Closing Date.


 


(h)           Defense of Claims.  After the Closing, if Prism or Provident
becomes a defendant or counter-defendant in connection with a lawsuit with
respect to the matter described in item 1 of Schedule 5(h) and for which
Buyer is seeking indemnification pursuant to Section 8, then Buyer agrees
to cause Prism or Provident, as applicable, to vigorously defend against the
claims made in such lawsuit with its commercially reasonable best efforts.


 


8.             Indemnification.


 


(a)           Survival; Right to
Indemnification.  All
representations, warranties, covenants and obligations of the parties contained
in this Agreement and in any document or instrument executed and delivered in
connection herewith shall survive the Closing, regardless of any investigation
made by the parties hereto.  This Section 8
shall have no effect upon any other obligation of the parties hereto, whether
to be performed before or after the Closing. 
No party to this Agreement shall have liability for indemnification to
any other party with respect to any representation or warranty unless, on or
before the date eighteen (18) months following of the Closing Date, the party
seeking indemnification notifies the other parties of a claim in writing
specifying the basis thereof in reasonable detail to the extent then known by
the party seeking indemnification.


 


(b)           Sellers’
Indemnification.   Sellers,
individually and separately (not jointly and severally), hereby indemnify and
hold harmless Buyer, and each of its representatives, employees, officers,
directors; stockholders, controlling persons and affiliates (collectively, the “Buyer Indemnified Persons”) from, and will pay to Buyer
Indemnified Persons, the amount of, any loss, liability, claim, damage (including,
without limitation, incidental and consequential damages), cost, expense
(including; without limitation, interest, penalties, costs of investigation and
defense and the reasonable fees and expenses of attorneys and other
professional experts) or diminution of value, whether or not involving a
third-party claim (collectively, “Damages”),
directly or indirectly arising from, attributable to or in connection with:


 


13

















 


(i)            any material
representation or warranty made by a Seller in this Agreement or any of the
Sellers’ deliveries at the Closing, that is, or was at the time made,
materially false or inaccurate, or any breach of, or misrepresentation with
respect to, any such representation or warranty;


 


(ii)           any breach by a Seller
of any material covenant, agreement or obligation of the Sellers contained in
this Agreement;


 


(iii)          the claim by Production
and Maintenance, Inc. (“PMI”) for a
bonus equal to 5% of the net profit of the Unit under that certain Management
and Operations Agreement dated October 1, 1997 between PMI and Provident
and more particularly described in Exhibit A attached hereto.


 


Notwithstanding anything to the contrary
contained in this Agreement, Buyer acknowledges and agrees that no Seller will
be responsible as an indemnifying party in an amount in excess of the lesser of
(i) the product of (x) the Damages sought and (y) such Seller’s
proportionate ownership of the Shares immediately prior to Closing, or (ii) the
amount of Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00).   Further, no Seller will be responsible for
any amount in connection with Damages arising from the other Seller’s breach of
his representation at Section 5(a) of this Agreement.  Notwithstanding the foregoing, or anything
else to the contrary, no Seller will have any liability for indemnification
with respect to the matters described in this Section 8(b) until the
total of all damages with respect to such matters exceeds Fifty Thousand and
No/100 Dollars ($50,000.00) (the “Deductible Amount”),
and then only to the extent such indemnified Damages exceed the applicable
Deductible Amount.   Anything to the
contrary notwithstanding, the Sellers aggregate liability with respect to
Damages and their indemnification may not exceed Five Hundred Thousand and
No/100 Dollars ($500,000.00) (the “Maximum Amount”).


 


(c)           Buyer’s
Indemnification.  Buyer agrees to
indemnify and hold each Seller and each Seller’s respective nominees,
successors, heirs, assigns, trustees, agents, employees and beneficiaries
harmless from any and all third-party liabilities, claims, causes of action,
penalties, demands, and expenses of any kind or nature whatsoever (including
without limitation court costs and attorneys’ fees) arising out of, resulting from,
relating or incident to (i) any material representation or warranty made
by Buyer in this Agreement, that is, or was at the time made, materially false
or inaccurate, or any breach of, or misrepresentation with respect to, any such
representation or warranty; (ii) any breach by Buyer  of any material covenant, agreement or
obligation of the Buyer contained in this Agreement, (iii)  the use,
ownership or operation of Prism, Provident and the Unit;  (iv) the business of either Company, (v) 
the development, maintenance or operation of the Unit during Buyer’s ownership
thereof, and (vi) the Companies’ lawsuit with the Bullington Group,
including, but not limited to, any past, present or future cost, expense or
damages related to such dispute and the Listing Broker Services Agreement that
is a part thereof and claims arising therefrom. 
Buyer shall have no liability for indemnification with respect to any
representation or warranty unless, on or before the date eighteen (18) months
following of the Closing Date, Sellers notify Buyer of a claim specifying the
basis thereof in reasonable detail to the extent then known by Sellers.


 


(d)           Procedure for
Indemnification; Third Party Claims.


 


(i)            Promptly after receipt
by an indemnified party under Section 8(b) or (c) of a written
notice (the “Notice of Claim”) of
the commencement of any action, suit or proceeding against it, or written
threat thereof, such indemnified party will, if a claim is 


 


14

















 


to be made
against an indemnifying party under either of said sections, as applicable,
give notice to the indemnifying party of the commencement of such action, suit
or proceeding.  The indemnified party
shall furnish to the indemnifying party in reasonable detail such information
as the indemnified party may have with respect to such indemnification claims
(including copies of any summons, complaint or other pleading which may have
been served on it and any written claim, demand, invoice, billing or other
document evidencing or assenting the same). 
Subject to the limitations set forth in this Section 8, no failure
or delay by the indemnified party in the performance of the foregoing shall
reduce or otherwise affect the obligation of the indemnifying party to
indemnify and hold the indemnified party harmless except to the extent that
such failure or delay shall have materially and adversely affected the
indemnifying party’s ability to defend against, settle or satisfy any action,
suit or proceeding the claim for which the indemnified party is entitled to
indemnification hereunder.


 


(ii)           If the claim or demand
set forth in the Notice of Claim given by the indemnified party is a claim or
demand asserted by a third party, the indemnifying party shall have 30 days
after the Date of Notice of Claim to notify the indemnified party in writing of
its election to defend such third party claim or demand on behalf of the
indemnified party (the “Notice Period”);
provided, however, that the indemnified party is authorized to file any motion,
answer or other pleading which it deems necessary or appropriate to protect its
interests during the Notice Period.  If
the indemnifying party elects to defend such third party claim or demand, the
indemnified party shall make available to the indemnifying party and its agents
and representatives all records and other materials which are reasonably
required in the defense of such third party claim or demand and shall otherwise
cooperate (at the sole cost and expense of the indemnifying party) with, and assist
(at the sole cost and expense of the indemnifying party) the indemnifying party
in the defense of, such third party claim or demand, and so long as the
indemnifying party is diligently defending such third party claim in good
faith, the indemnified party shall not pay, settle or compromise such third
party claim or demand.  The indemnified
party has the right to employ counsel separate from counsel employed by the
indemnifying party in any such action and to participate therein, but the fees
and expenses of such counsel will be at the indemnified party’s own expense,
unless (a) the employment thereof has been specifically authorized by the
indemnifying party, (b) such indemnified party will have been advised by
counsel reasonably satisfactory to the indemnifying party that there may be one
or more legal defenses available to it that are different from or additional to
those available to the indemnifying party and in the reasonable judgment of
such counsel it is advisable for such Indemnified Party to employ separate
counsel, or (c) the indemnifying party has failed to assume the defense of
such action and employ counsel reasonably satisfactory to the indemnified
party, in which case the fees will be paid by the indemnifying party.  If the indemnifying party assumed the defense
of any claim or proceeding in accordance with this Section 8(d)(ii), the
indemnifying party will be authorized to consent to a settlement of, or the
entry of any judgment arising from, any such claim or proceeding, with the
prior written consent of such indemnified party, not to be unreasonably
withheld; provided, however, that the indemnifying party is not authorized to
encumber any of the assets of any indemnified party or to agree to any
restriction that would apply to any indemnified party or to its conduct of
business; and provided further, that a condition to any such settlement is a
complete release of such indemnified party and its affiliates, directors,
officers, employees and agents with respect to such claim, including any reasonably
foreseeable collateral consequences thereof.


 


15

















 


(iii)          If the indemnifying
party does not elect to defend such third party claim or demand or does not
defend such third party claim or demand in good faith, the indemnified party
shall have the right, in addition to any other right or remedy it may have
hereunder at the indemnifying party’s expense, to defend such third party claim
or demand.  The failure of the
indemnified party to notify the indemnifying party as provided herein will not
relieve the indemnifying party of its obligations hereunder except to the
extent that the indemnifying party is actually prejudiced by such failure to
notify.


 


(iv)          The term “Date of Notice of Claim” shall mean the date
the Notice of Claim is effective pursuant to this Agreement.


 


(e)           Exclusive Remedies;
Limitations.  Notwithstanding
anything to the contrary contained herein, the remedies provided in this Section 8
are the exclusive remedies of the parties to this Agreement for breach of any
representations, warranties, covenants or agreement in this Agreement and limit
any other remedies that may be available to any indemnified party.  No Seller shall be jointly and severally liable
for any Damages pursuant to this Section 8.


 


(f)            No Further
Adjustments.  Following the
adjustments under subsection (c) above, no further adjustments shall be
made under this section, unless agreed to in writing between Buyer and Sellers.


 


9.             Miscellaneous
Provisions.


 


(a)           No Third Party Beneficiaries.  Nothing in this Agreement shall confer any
rights upon any person or entity other than the parties hereto and their
respective heirs, successors and permitted assigns.


 


(b)           Costs and Expenses.  Buyer shall bear all of Buyer and Sellers’
costs and expenses (including, but not limited to, attorney’s fees) incurred in
connection with the negotiation, preparation, execution, and Closing of this
Agreement, regardless of whether this Agreement is subsequently terminated.


 


(c)           Notices.  Any notice provided or
permitted to be given under this Agreement shall be in writing, and may be
served by personal delivery, by telecopy or similar facsimile means, by express
courier or delivery service, or by depositing same in the mail, addressed to
the party to be notified, postage prepaid, and registered or certified with a
return receipt requested.  Notice
deposited in the mail in the manner hereinabove described shall be deemed to
have been given and received on the date of the delivery (or earliest attempted
delivery) as shown on the return receipt or returned envelope, whichever is
applicable.  Notice served in any other
manner shall be deemed to have been given and received only if and when
actually received by the addressee (except that notice given by telecopy or
similar facsimile means shall be deemed given and received upon receipt only if
received during, normal business hours and if received other than during normal
business hours shall be deemed received as of the opening of business on the
next Business Day).


 


For purposes of any notice
provided or permitted to be given under this Agreement, the addresses of the
parties shall be as follows:


 


If to Sellers:


 


16

















 


Billie J. Eustice


2526 I East 71st Street


Tulsa, OK 
74136


Facsimile No.:


 


17

















 


and


                


The Gary L. Little Trust


2526 I East 71st Street


Tulsa, OK 
74136


Attn: Glen Stoner, Trustee


Facsimile No.:


 


with a copy to:


 


Munsch, Hardt, Kopf & Harr, P.C.

3800 Lincoln Plaza

500 N. Akard Street

Dallas, TX  75201

Attn:  Mark L. Nastri

Facsimile No.:  214-978-5311


 


If to Buyer:


 


Arkanova Acquisition Corporation

21 Waterway Avenue


Suite 300


The Woodlands, TX


Attention: Pierre Mulacek


Facsimile No.:  281-362-2788


 


With a copy to:


 


Snell Wylie & Tibbals, P.C.


8150 North Central Expressway


Suite 1800


Dallas, TX 75206


Attention:  Phillip A. Wylie


Facsimile No.:  214-691-2501


 


Each
party shall have the right, upon giving 10 days prior notice to the other in
the manner hereinabove provided, to change its address for purposes of notice.


 


(d)           Binding Effect;
Assignability.  This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, representatives, successors, and assigns; provided that no
party may assign its rights and obligations under this Agreement without the
prior written consent of the other parties hereto.


 


(e)           Amendments and
Waivers.  The provisions of this
Agreement may not be amended, modified, supplemented or terminated, and waivers
or consents to departures from the provisions hereof may not be given, without
the written consent of each of the parties hereto.


 


(f)            Severability.  All agreements and covenants contained herein
are severable and, in the event any of them shall be held to be invalid by any
competent court, this Agreement shall be interpreted as if such invalid
agreements or covenants were not contained herein.  Should any court or other legally constituted
authority determine that for any such agreement or covenant to 


 


18

















 


be effective
that it must be modified to limit its duration or scope, the parties hereto
shall consider such agreement or covenant to be amended or modified with
respect to duration and scope so as to comply with the orders of any such court
or other legally constituted authority, and as to all other portions of such
agreement or covenant they shall remain in full force and effect as originally
written.


 


(g)           Further Assurances.  After the date hereof, each party hereto
shall, at the request of any other party hereto, furnish, execute, and deliver
such additional documents and instruments and further assurances as may be
reasonably necessary to carry out the purposes and intent of this Agreement.


 


(h)           No Sales Taxes.  No sales, transfer or similar tax will be
collected at the Closing from Buyer in connection with this transaction.  If, however, this transaction is later deemed
to be subject to sales, transfer or similar tax, for any reason, Buyer agrees
to be solely responsible, and shall indemnify and hold Sellers (and their
affiliates and any directors, officers, employees, attorneys, contractors,
agents, and attorneys) harmless, for any and all sales, transfer or other
similar taxes (including related penalty, interest or legal costs) due by
virtue of this transaction on the Stock transferred pursuant hereto and the
Buyer shall remit such taxes at that time. 
Sellers and Buyer agree to cooperate with each other in demonstrating
that the requirements for exemptions from such taxes have been met.


 


(i)            Entire Agreement.  This Agreement and the exhibits hereto
constitute the entire agreement between the parties with respect to the subject
matter hereof, and supersede all prior agreements and understandings between
such parties with respect to such subject matter.


 


(j)            Governing Law;
Venue.  This Agreement must be
construed and enforced in accordance with, and all questions concerning the
construction, validity, interpretation and performance of this Agreement are
governed by, the laws of the State of Oklahoma, without giving effect to
provisions thereof regarding conflicts of law.


 


(k)         Survival of
Representations and Warranties.  The
representations and warranties set forth in Section 5 and Section 6
shall survive for a period of 18 months after Closing.   The covenants set forth in Sections
7(c),  8 and this Section 9 will
survive termination of this Agreement until the end of the applicable statute
of limitations period.


 


(l)            Multiple
Counterpart.  This Agreement may be
executed in multiple counterparts, each of which shall constitute an original
and all of which shall constitute one document; and furthermore, a facsimile
signature shall be deemed an original.


 


(m)          Termination.


 


(i)            This Agreement may, by
written notice given at or prior to the Closing in the manner provided in Section 9(c) hereof,
be terminated or abandoned:


 


(a)           at any time at or prior
to the Closing by mutual consent of Seller and Buyer;


 


(b)           at any time at or after
September 4, 2008, by Seller or Buyer if the Closing shall not have
occurred by such date;


 


19

















 


(c)           at any time by Buyer if
a material default or breach shall be made by Seller with respect to the due
and timely performance of the covenants and agreements, or with respect to the
correctness of or due compliance with any of its representations and
warranties, contained herein and such default or breach cannot be cured and has
not been waived; or


 


(d)           at any time by Sellers
if a material default or breach shall be made by Buyer with respect to the due
and timely performance of the covenants and agreements, or with respect to the
correctness of or due compliance with any of its representations and
warranties, contained herein and such default or breach cannot be cured and has
not been waived;


 


provided, however, no such
party may exercise any right of termination pursuant to this Section 9(m)(i) if
the event giving rise to such termination right shall be due to the willful
failure of such party to perform or observe in any material respect any of the
covenants or agreements set forth herein to be performed or observed by such
party.


 


(ii)           In the event of
termination of this Agreement pursuant to Section 9(m)(i) (a),
9(m)(i)(b) or 9(m)(i)(d), the Earnest Money Deposit will be forfeited to
Sellers (in equal proportions) by Buyer, and this Agreement will forthwith
become void and there will be no liability or obligation on the part of Buyer,
Sellers, or their respective officers, directors or shareholders, except that
Sections 7(c), 8, 9(b), 9(c) and this Section 9(m) will survive
any termination or expiration of this Agreement.


 


(n)           As used in this
Agreement, the term “Business Day”
means a day which is not a Saturday, Sunday or legal holiday.


 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


 


20

















 


Signatures


 


To evidence
the binding effect of the foregoing terms and conditions, the parties hereto
have caused this Agreement to be executed and delivered as of, but not
necessarily on, the date first above written.


 


 


	
   

  	
  Sellers:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Billie J. Eustice

  
	
   

  	
  Billie J. Eustice, Individually

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE GARY L. LITTLE TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Glen Stoner

  
	
   

  	
   

  	
  Glen Stoner, Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Buyer:

  
	
   

  	
   

  
	
   

  	
  ARKANOVA ACQUISITION CORPORTION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Pierre Mulacek

  
	
   

  	
   

  	
  Pierre Mulacek, President

  



 


21

















 


Schedule
5(h)


 


1.             There have been
contractual agreements in the past between Provident and Production and Manufacturing, Inc.,
an independent contractor, concerning operational activities related to the
Unit, which include a Management and Operations Agreement dated October 1,
1997., as amended.  It is Sellers’,
Provident’s and Prism’s position that they are not subject to the 5% net
profits terms of said Management and Operations Agreement.


 


2.             The Companies
are  the Plaintiffs in a lawsuit  filed in the United States District Court for
the District of Montana, Great Falls Division, against Murphy Phillips,
individually, as Executor of the Estate of Floyd Fullingim and as Trustee of
the Ford  and Myrtle Fullingim Trust,
Wallace Bullington, O.O “Red” Thompson and Montex Energy Technologies, Inc.
involving a Listing Agreement relating to the sale of Provident’s oil and gas
properties.  It is Sellers’, Prism’s and
Provident’s position that this Listing Agreement has expired and is
unenforceable.  It is the position of the
Defendants that the Listing Agreement has not expired.


 


22